Exam 16: Multistate Corporate Taxation

Most states begin the computation of taxable income with an amount from the Federal income tax return.

Typically included in the sales/use tax base is the purchase of computer and cell phone equipment by a large consulting firm that is incorporated in the state.

A capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

The property factor includes land and buildings used for business purposes.

Your supervisor has shifted your responsibilities from the Federal corporate income tax to a multistate corporate income tax practice.In what areas might your Federal income tax knowledge also be applicable in your new assignment?

In unitary states,a(n)____________________ provision permits a multinational corporation to elect to limit the reach of the state's taxing jurisdiction to activities occurring within the boundaries of the United States.

A local business wants your help in making a decision about a large capital investment.Should your advice concentrate on tax or non-tax implications of the decision?

A state wants to increase its income tax collections,but politically it would be unwise to raise taxes on in-state individuals or businesses.Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

Under Public Law 86-272,a state is prohibited from taxing a business if the only connection with the state is the _____________________ of orders for sales of tangible personal property that are sent outside the state for approval or rejection and,if approved,are filled and shipped by the business from a point outside of the state.

Parent and Junior form a unitary group of corporations.Parent is located in a state with an effective tax rate of 3%,while Junior's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities,the group should:

The model law relating to the assignment of income among the states for corporations is:

In most states,medical services are exempt from the sales/use tax base.

Most states' consumer sales taxes apply directly to the final purchaser of the taxable asset,who then remits the tax to the state treasury.

Leased property,when included in the property factor,usually is valued at ____________________ times its annual rental,even though the taxpayer does not own the asset. or

In conducting multistate tax planning,the taxpayer should:

In the apportionment formula,most states assign more than a one-third weight to the ____________________ factor.

A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer.What is the significance of the term nexus when discussing state income taxation?

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes. or or

The typical local property tax falls on both an investor's real estate and her stock portfolio.

If a gift card is unused after a specified period of time,the state can collect the amount of the card proceeds from the seller,as ____________________ property.